From the time I was a child, I recall my parents talking about the importance of living within one’s means. This basic premise, I suspect, was driven into most of us during our formative years. Businesses must deal with the same rules. But somehow the people we elect to represent us at the federal government level—i.e. U.S. senators and U.S. representatives—seem to forget this fact. (In all fairness, not all of them forget … just a majority.)
While the world watched in escalating stages of fear, congressional leaders came to a consensus on increasing the U.S. national debt ceiling. While not all details have yet surfaced, those that have emerged are not very comforting. It seems that most of the budget cuts do not occur until 2014 and after. It also scares me that it took 235 years to amass $11 trillion, plus change, of debt, but it will only take about 18 months of a so-called fix to increase the debt by yet another $2.4 trillion.
That means that the debt will increase at a rate of more than 1 percent per month before the “cuts” begin! It is important, too, that we the people understand that Congress’ version of cuts is not what you and I think of. Congress counts as a cut the lowering of future increases. For example if Congress was expecting a 3 percent increase in 2014, but instead permitted only a 2 percent increase, that 1 percent differential is tallied as a reduction in spending. Not exactly GAAP standards, in my view.
For the sake of our country, and for that matter the world, we have to find a way for all governments to live within their means. With many European countries, nearly all African countries, several South American countries and the United States in financial straits, the time for serious action is upon us.
I do not think the bill passed last week will get the job done. Apparently neither did the stock market, as it dropped 265 points the day after President Obama signed the bill into law and now continues its decline. This is a serious problem, and it requires serious solutions.